03/2020
REPORT
Copyright © The Talent Enterprise, All rights reserved.
THE DRIVING FORCE OFORGANISATIONAL TRANSFORMATION
PREPARED BY:
TheInnovationMindsetOf Leaders
INTRODUCTION
Copyright © The Talent Enterprise.
All rights reserved.
WHAT IS INNOVATION
RESEARCH RESULTS
2
4
6
6
TABLE OF CONTENTS
Organisations, Industry andCompetitors
Critical Areas of Innovation
CONCLUSION
12
20
TheInnovationMindsetof Leaders
REPORT
REFERENCES 23
ABOUT THE AUTHORS ANDRESEARCH
22
EXECUTIVE SUMMARY 1
ACKNOWLEDGMENTS 24
The realproblem isn’t aknowledge gap,it’s a mindsetone.
Organisation lifecycles have never been shorter and faster than they
are today. According to a corporate longevity study[1], the average
lifespan of a S&P 500 company is under 20 years, down from 60
years in the 1950s. And when looking at the list of Fortune 500
companies that existed in 1955, only 54 – just over 10% - still
remain[2].This is caused by a mix of disruptive technologies,
changing business models, burgeoning startups, intensified
competition, evolving markets, shifts in world economies and
several other factors. The need for change agility and continuous
innovation has therefore become critical for businesses to sustain
growth and remain profitable. In fact, innovation – a buzz word that
is associated by many with new technology in the past - seems to be
on a growing number of company and government agendas these
days because it is at the crux of their future existence.
Many studies have focused on identifying the role innovations have in giving organisations an
edge to either disrupt their markets or provide them with a competitive advantage. But what drives
corporate transformation and innovation? Knowledge on what to do and how to do it is of course
key, but our collective experience tells us that the real problem isn’t a knowledge gap, it’s a mindset
one.
Independent of The Talent Enterprise’s work with clients to assess their human capital for
innovation potential, Sia Partners’ experience in building innovation strategies and The Global
Innovation Management Institute’s wealth of knowledge in the sector, we initiated this research
paper to gain a deeper understanding on the state of organisational innovation and the role
leaders play in creating a mindset that drives it.
EXECUTIVE SUMMARY
[1] Credit Suisse, Corporate Longevity Index, https://research-doc.credit-suisse.com/docView?
language=ENG&format=PDF&sourceid=em&document_id=1070991801&serialid=TqtAPA%2FTEBUW%2BgCJnJNtlkenIBO4n
HiIyPL7Muuz0FI%3D, February 2017
[2] Lucinda Shen, These Companies Have Made the Fortune 500 Every Year Since 1955, Fortune.com:
https://fortune.com/2018/05/22/fortune-500-companies-list-berkshire-hathaway/ , May 22, 2018
1
The effects of stress can be either positive or negative. What is
perceived as positive stress by one person may be perceived as
negative stress by another, since everyone perceives situations
differently. According to Barden (2001), negative stress is becoming a
major illness in the work environment, and it can debilitate
employees and be costly to employers. Managers need to identify
those suffering from negative stress and implement programs as a
defense against stress. These programs may reduce the impact
stress has on employees' work performance.
INTRODUCTION
587 leaders7 experts20 countries
ABOUT THE STUDY
We surveyed +587 managers, senior experts, directors and
executive leaders across 20 countries to evaluate the
current situation:
In addition to this, we conducted in-depth interviews with 7
senior subject matter experts to add clarity to innovation’s
critical aspects, address common mistakes and share
insight and best practices on how to better innovate in an
organisational setting.
How conscious are managers and leaders when it comesto the transformation of their industry sector?How proficient do they see their own organisation when itcomes to the different aspects of innovation?What are the mindset gaps?Who drives innovation?What is their stance when faced with risk?What parts of the innovation process are they good at?What needs work?How active are employees when it comes to innovation
KEY FINDINGS
Highlights of the research include the following:
Senior leadership teams may be growing more complacent
75% of Senior executives see their organisations as innovative
– only 53% think the same of their competitors. However, this
difference in perception between self and others is
considerably smaller when looking at lower levels of
management. This could indicate a certain level of
complacency amongst senior leadership teams.
Innovation is overly dependent on senior leaders
Senior executives and board members are the drivers of innovation across most organisations
and the majority of respondents feel they also initiate the most important innovation ideas.
While their role is to drive innovation, the experts interviewed agreed that within innovative
companies, all hierarchy levels actively participate in idea generation and other steps of the
innovation process. This therefore presents a significant growth opportunity for most
organisations.
2
INTRODUCTION
3 out 4businessesare risk aversewhen it comesto innovation.
KEY FINDINGS
Organisations must improve internal processes and corporate culture to foster innovation
Most leaders find their organisations innovative when looking at products (66%), services (62%) and
business strategy (69%). However, culture (52%) and processes (42%) rated lower. This is a concern
according to experts who insist that innovative companies all have cultures where innovation can
flourish and processes in place to support it.
Most organisations are afraid of risk and avoid directly analysing it
3 out 4 businesses are risk averse when it comes to innovation. Our
research indicates that throughout organisational hierarchies, there
is a significant fear factor associated with trying new approaches.
This aversion is matched by a strong preference to stick to
established practices, industry norms and corporate procedures.
Interestingly, the organisations who are the most risk averse are not
very proficient when it comes to analysing it. When drilling down
our data, results also show that risk aversion is associated with a
perception of lower innovation levels and lower ratings in key
innovation aspects.
Risk analysis and inter-departmental collaboration: weak links of the innovation processWhile most organisations fare well when it comes to the idea generation phase of the innovationprocess, they are perceived as needing to improve in all other stages, especially the risk analysis andcollaboration ones. This suggests that departments may not do enough homework when it comes toassessing risk and when they work on an innovation project, departments and teams tend to work insilos rather than collaborate across organisational structures and hierarchies. This could be due tolack of processes and incentives according to experts.
Leaders arecommitted toinnovation onpaper but do notfully support it.
Leaders are committed to innovation on paper, but in reality, do
not fully support it
73% of respondents say leaders are committed to supporting
innovation. But when it comes to trialing and testing new ideas,
the number goes down to 59%. This suggests that while there is
commitment on paper, other mindsets that are critical to
innovation are falling short and could be compromising overall
organisational innovation success.
3
“The creation AND capture of new values in new ways - through new offerings, experiences,
technologies, channels or business models - across the extended enterprise including customers,
channels, suppliers and partners.”
– Ron Jonash, Chairman of the Board, Global Innovation Management Institute
WHAT IS INNOVATION?
Being heavily involved in helping companies innovate, we know that the meaning of the term innovation
goes far beyond product or technology. Here are the important aspects that come to mind when we think
of organisational innovation in all its forms.
“Innovation does not just sit with the CEO or R&D or innovation teams, everyone has a role to play
in the process. When we work with our clients to assess their innovation readiness, our
assessment looks at the different types of innovation mindsets that exist within the organisation:
disruptors, strategisers, activators, implementors and influencers. If you are looking to innovate,
as a leader, being aware of your organisation’s innovation profile with regards to human capital
is critical.”
- David Jones, CEO and Founder of The Talent Enterprise
“Innovation is far-reaching and goes far beyond technology. Innovation is a process, not an event. And
as such it can be developed and mastered. Many organizations place emphasis on the front-end of
innovation, where ideas are generated, but the true value is created on the back-end, where those ideas
are evolved into business concepts, assumptions are continuously pressure tested, and eventually
prototypes are brought to market. If organizations start putting more emphasis on this back-end, they
will experience tremendous progress on their innovation maturity.”
– Rafael Lemaitre, Partner of Sia Partners
4
When interviewing our panel experts[3], they also each had a slightly
different view on innovation, but all of them agreed on the following:
Innovation isn'tnecessarilyground-breaking.
However, as you will see in the next section, the results from our survey across
over 500 senior professionals worldwide demonstrate that many of the above-
stated elements are not present in most organisations.
ADDING VALUE to the business is the innovation imperative.
Innovative behavior can and should be initiated THROUGHOUT THE
ORGANISATION
Innovation is NOT NECESSARILY GROUND-BREAKING. In fact, it is often
small enhancements and solutions that improve different aspects
of the business
Innovation must be structured and embedded into AN
ORGANISATION'S PROCESSES in order for it to be sustainable
The most innovative companies have innovative leaders who are
NOT SCARED OF RISK and capable of analysing it.
Innovative leaders know the power of TESTING and continuously
pressure test their assumptions
Innovative leaders are NEVER OK WITH THE STATUS QUO, even when
the business is doing well.
5
WHAT IS INNOVATION?
[3] The Talent Enterprise, Sia Partners, The Global Innovation Management Institute, The Innovation Mindset of Leaders - The Expert View,
February 2020
The first thing we wanted to know from all survey respondents was what
motivated their innovation efforts, how important innovation was in their
industry, and how their organisation and its competitors were positioned
when it came to it.
Why companies innovateWhen asked what the primary goals of their organisation’s innovation effort
were, the following top 3 reasons came up for all organisations, regardless
their size, geography or the seniority level of respondents.
1. Increasing market share in existing markets
2. Adding new value to current products
3. Disrupting current market by creating new processes or business models
Introducing new products or
reducing costs of products or
services seemed to be the
objectives that ranked the
lowest. These results are
substantiated by Sia Partners’
research indicating that in
today’s competitive landscape,
organisations cannot increase
or even maintain their market
share without incorporating
innovation in their overall
growth strategy.
RESEARCH RESULTS
ORGANISATIONS, INDUSTRY AND COMPETITORS
The state of innovation within industriesClose to 88% of respondents across all organisation sizes felt their industry
was either likely or very likely to change significantly in the next 5 years.
Disruption is evidently a subject many of these organisations acknowledge
and most are well aware of the impact that the speed of change has on their
respective industry is more significant than ever.
Size mattersOur findings also showed that the
bigger the company size, the more
managers and leaders felt innovation
was important to their industry. 75%
of large organisations (1000+
employees) saw innovation as very
important versus 44% to 59% of
smaller organisations. This belief was
consistent across all hierarchical
levels within management and is
probably due to the fact that larger
companies have bigger opportunities
to innovate.
1.06%
5.11%
6.35%
34.75%
52.73%
What is the likelihood of your industrychanging significantly in the next 5 years?
Not at all likely
Not likely
Don't know/neutral
Likely
Very likely
0% 20% 40% 60%
Fig 1: How likely respondents thought their industry was going to change in the next 5 years
6
Larger companies are also using new ways to innovate according to
some of the experts we met. Many are increasingly working together to
create innovations and even disruption.
Phil Jordan, Group Chief Information Officer at Sainsbury’s, a large UK-
based retailer, tells us why innovating with other industry players
should be on every CEO’s agenda, “In today’s digital platform economy,
it is important to give a lot of thought on how you work with your
ecosystem of partners and providers. These relationships can be quite
transactional in big companies, but the more connected the ecosystem
gets, the more innovation becomes a collective requirement. Having
partners with intersecting innovation cultures with whom you can
rethink and solve problems as an industry can deliver massive leaps in
innovation. Cost, “short-termism”, differentiation and competitiveness
are issues that typically get in the way of that; but I believe we will see
more industries come together to solve shared problems in the years
ahead.”
Ron Jonash also mentions that building rich partner networks to build
compelling win-win value propositions was a hallmark sign of a
forward-thinking leader, “Most leaders want to do it themselves or
within their company – but the best ones reach out and have key
partners who can enable them to think with an open mindset, look at
different business models, etc and explore the “what’s next”."
Having partners(...) with whomyou can rethinkand solveproblems as anindustry candeliver massiveleaps ininnovation.
Top leadership: uber-aware or complacent?When zooming in on organisations themselves, there is a disparity between
the perception of Executive Leadership and lower levels of management
regarding their own organisation’s innovation level against that of their
industry peers and competitors.
53%
72%75%
71%75%
81%78% 78%
Perception of industry peers vs own organisationresponse per leadership role
ExecutiveLeaders
Senior Managers IndividualContributors
Middle Managers
Leadership role type
50%
60%
70%
80%
90%
% o
f res
pond
ents
Perception of own organisationPerception of peers
Fig 2: Perception
respondents had on the
level of innovation of
their peers vs their own
organisation.
7
RESEARCH RESULTS
ORGANISATIONS, INDUSTRY AND COMPETITORS
You will neverhave aninnovativeorganisationwith a leadership thatis notprogressive.
As shown on figure 2 (previous page):
The high delta between Executive Leaders’ perception of competitors’
innovation levels and that of their own organisation raises some concerns.
Perhaps they are experiencing a “curse of knowledge” effect, which makes
them assume facts other levels of management might not be aware of or
understand. Although this has its downfalls, it is evidently far less hazardous
than the other possibility, which is that they are underestimating their
competitors. Or worse, that these top leaders have grown complacent.
What the experts say about itAs Pedro S. Pereira, Director of Innovation and Digital Transformation at SAP
points out,“The biggest barrier of innovation in a company can be its own
success. Some businesses succeed and just keep doing the same thing over
and over, reaping the fruits of their journey thus far without paying attention
to what’s going on around them. In fact, many leaders avoid looking outside
because they might not like what they see; they don’t want to go deeper
because they know there are existential threats to their current business that
could change their status quo. The responsibility of any leader is to drive
innovation. If they don’t, it means they are only avoiding the inevitable of fate
that their lifecycle will end and they will lose the mark.“
Dr Hazza Khalfan Alneaimi, who manages the Dubai Government Excellence
Program for The Executive Council of Dubai, and who has a vast experience
when it comes to seeing innovation come to life in a public sector context,
states, “You will never have an innovative organisation with a leadership that
is not progressive. Employees will mirror their leaders.”
Muhammad Chbib, CEO of Tradeling.com, the first online trading platform in
the Middle East and Co-Founder of Tajawal, one of the region’s leading online
travel portals, gives his view on the role of C-suites in innovation, confirming
there should be no space for complacency at the top: “When I look at the most
innovative organisations I know – whether it is a football team or high tech
company - the most common trait at a leadership level is what I would call
restlessness: they always try to change the status quo for something better,
even if they are already seen as the best.”
Complacency of the top leadership with their organisation’s superior
positioning within its industry has led to some of the most well-known
disruptions in business history. Kodak, Motorola, Nokia and Blockbuster are
text-book examples of this.
8
RESEARCH RESULTS
ORGANISATIONS, INDUSTRY AND COMPETITORS
Only 53% of Executive Leaders considered their competitors as innovative orvery innovative while 75% felt this way about their own organisationWhen looking at senior managers, those numbers were 72% vs 81%For middle managers, they were 71% vs 78%For individual contributors (senior staff who do not manage a team, eg.advisor, subject matter expert, legal counsel, etc) they were 75% and 78%
Perhaps the most intriguing number on figure 2 was that in this
age of disruption and change, 16% of all respondents across all
levels of the management hierarchy did not know how
innovative their competitors were and 12% felt this way about
their own organisation.
While this may be a minority of people, it remains a considerable
liability for organisations to have this “naivety” or lack of interest
within their management teams.
Understanding an organisation's innovation mindset?The question does pose itself: how can an organisation know
whether its leaders are fit for innovation? According to Gaurav
Burman, APAC President at 75F, a leader in smart building
automation technology, formal assessments and subsequent
training are essential, “Where current employees are concerned
(…), we use assessments to understand their development areas
and identify what they need to gain the mindsets and skills that
fit into an innovative ecosystem.”
When The Talent Enterprise team works with companies, the
client organisation is assessed as a whole and individually with
The Innovation Mindset Index™ to understand everyone’s
dominant innovation mindset. This process always starts with the
leaders - because as detailed in the following section, they are
the driving force of innovation – all the way through to more
junior positions. Once clients have data on their hands, they have
a better sense of where they stand and can get an appropriate
action plan in place with objectives as well as training,
development and milestones to achieve them.
Lack of interest or naivety?
1 in 5 leadersdo not knowhow innovativetheir ownorganisation is.
9
RESEARCH RESULTS
ORGANISATIONS, INDUSTRY AND COMPETITORS
What the expert saysThis essential point was shared by all the authorities on innovation
interviewed, including Nasser Abu Shehab, CEO, Strategy and Corporate
Governance Sector, Roads & Transport Authority Dubai (RTA) in the UAE, who
explains, ”Sometimes we tend to think of innovation as “big stuff”, but I believe
innovation is also made up of the thousands of little things we do every day to
improve all aspects of the business in a new way. In a large organisation like
RTA, we also strongly encourage and support the “small stuff” because all these
little ideas add up and have a huge impact on the big picture. If you see your
company as a talent pool, you need to tap into it otherwise, you will miss out
on a huge innovation opportunity. As Head of Innovation, my role is not to be
the creator of all new ideas, but rather to create an environment – including
systems and processes - for idea creation across the company.”
What the numbers show
However, while experts agreed that innovative ideas can (and should) come
from every level of the hierarchy, the reality is different. Our survey results
indicate that across all geographies and company sizes, the most important
innovations generally come from an organisation’s more senior roles:
28%
11%
6%
56%
19%
27%
37%
17%
23%
33%
30%
14%
30%
29%
27%
13%
Where do your organisation's most importantinnovations originate from?
Rank from 1 to 4 (1 = where most ideas come from, 4= the least)
Board andTop
ManagementSenior
ManagementMiddle
Managers andnon-manageria
l staffFront office
0% 50% 100%
% of respondents
4
3
2
1
30% of respondents said the most important innovations in theircompany came from board and top managementThis was followed closely by senior management (29%) and middlemanagement and non-managerial staff (27%)13% said front-office staff generated the most innovative ideas56% of respondents thought front office staff was the last placeinnovative ideas came from
56% think frontoffice staff isthe last placeinnovative ideascome from.
Fig 4: Where the organisation's most important innovations come from
An opportunity to seize?These results inevitable begs the
question: why are organisations not
seizing this major innovation
opportunity? Is it deliberate or is there
a flaw in the way they treat
innovation? The answer seems to lie in
the next section, relating to the
various aspects of organisational
innovation.
11
RESEARCH RESULTS
ORGANISATIONS, INDUSTRY AND COMPETITORS
This section of the research focused on the internal aspects of innovation
and examined how respondents rated their organisations when it came to
the various facets of innovation, the general leadership attitude towards risk,
the proficiency for the different steps of the innovation process as well as
their perception of the extent top management supports innovation.
Key innovation aspects: process and culture need workOn average, products and services seem to be where leaders think their
company is most innovative across all levels of hierarchy.
RESEARCH RESULTS
CRITICAL AREAS OF INNOVATION
An innovative cultureOur experience tells us an innovative
culture is something that needs to
be nurtured throughout the
organisation. The survey's lower
rating on culture is likely an
important reason why findings in
figure 4 show that less than 14%
thought that front-office staff
generated innovative ideas and 56%
actually found it was the last place
they were generated from.Fig 5: Respondents rating on the level of innovation their organisation demonstrates on
key aspects of innovation: Products, Services, Processes, Business strategy and Culture.
However, this number was slightly lower when looking at culture and process:
66% of all respondents qualified their companies as being very good orexcellent when it came to service innovation levels 63% thought the same of their products60% felt this way about their organisation’s business strategy
53% qualified their culture as innovative or very innovativeonly 43% described their company’s processes as such
26%
26%
12%
22%
25%
37%
40%
31%
38%
28%
25%
23%
35%
27%
29%
8%
9%
16%
10%
13%
6%
Key aspects of innovation: ratingsRank from 1 to 5 (1 = poor, 5 = excellent)
Product
Service
Process
Business strategy
Culture
0% 50% 100%
% of respondents
5
4
3
2
1
Products andservices are theaspects whereleaders thinktheir company ismost innovative.
12
The role of senior leaders in the innovation processSenior managers and board members are clearly seen as the driving force of
innovation across all sectors and sizes.
54% and 55% of survey respondents saw board/top management and senior
management, respectively, as very important drivers of innovation within their
company.
7%
14%
6%
15%
20%
12%
9%
32%
30%
26%
32%
28%
20%
54%
55%
18%
16%
How important respondents viewed different levels in theorganisation when it came to driving innovation?
Rank from 1 to 5 (1 = not at all important, 5 = very important))
Board andTop
Management
SeniorManagement
MiddleManagers and
non-managerialstaff
Front office
0% 20% 40% 60% 80% 100%
% of respondents
Not at all important Not important
Neutral Important
Very important
innovativeleaders all haveone thing incommon: theyare visionaryand committedto continuousimprovement.
Fig 3: How important
respondents viewed
different levels in the
organisation when it
came to driving
innovation.
Industry experts unanimously agree that top level management have a crucial
role to play in innovation and that innovative leaders all have one thing in
common: they are visionary and committed to continuous improvement.
Though it comes as no surprise that innovation strategies and objectives are
set by senior leaders in the majority of cases, it is also important to highlight
that the role of the leadership in innovation is also to support the development
of the structures, processes and space, that will allow innovation to flourish
across the entire organisation. This component is critical because while
innovation should be driven by the higher levels, ideas should originate (and
executed) from everywhere.
10
RESEARCH RESULTS
ORGANISATIONS, INDUSTRY AND COMPETITORS
Worldwide research unanimously shows that culture plays a key role in
driving innovation and experts interviewed for this report were no
exception. Interestingly, they also agreed that processes – not
necessarily groundbreaking ones, but the right ones – not only help
build, but actually underpin a culture of innovation.
Nasser Abu Shehab explains, “In order to have an innovative culture
that drives value to your organisation, you need to have systems in
place such as an ideation process, acceleration labs, etc. which allow
people to contribute to innovation. Systems are essential if you want to
effectively capture your available innovative data in a structured way,
derive value and get results. Just having beautiful big open areas for
people to collaborate is not enough. If you want to derive value from
these ideas, you need systems. It’s not that you want to curtail creative
thinking, but you need to capture, process and follow it through to
conclude whether or not it is good for the business.”
Gaurav Burman, VP & APAC President at 75F, also mentions how the
innovation process should be weaved through the culture and
underlines senior leaders’ role in this: “It is important to instill
innovation throughout all the people processes: put in place regular
3/6/12-month innovation clinics at every level, challenge team leaders
on what they are doing, reward innovations, make sure teams have a
KPI on innovation, hire people who exhibit a healthy disrespect for the
status quo, award innovative initiatives, set up a business unit to head
and drive innovations for new or improved internal/external processes,
products and solutions. Without all that, it is just lip service – you can
do an ad-hoc innovation workshop but the ideas that come from it will
never see the light of day if you don’t have project owners who can put
budgets, resources, timelines and milestones to them. And of course,
the CEO needs to fully support these initiatives and drive them."
Both process and culture seem to be at the crux of innovation, and
leaders themselves recognise that these are not where their
organisations excel. The ones who do therefore have a distinct
competitive advantage.
The relationship between culture and processes
CRITICAL AREAS OF INNOVATION
If you don'tinstillinnovationthroughout allthe peopleprocesses, it isjust lip service.
13
One’s appetitefor risk affectswhether or notindividualspursue - orabandon -innovations.
RIsk aversion is a problemThe concept of risk is closely interlinked with innovation; risk is present in
many stages of an innovation process, from early stages of the ideation phase,
through to the implementation phase. Pursuing an innovation means that a
certain degree of risk needs to be taken. Sia Partners research [4] has found
that pursuing innovation implies a certain degree of risk-taking, which has
been identified [5] as a characteristic of efficient innovation managers while
risk-averse subjects are less innovative. One’s appetite for risk affects whether
or not individuals pursue - or abandon - innovations.
Yet, despite respondents seeing their organisation as generally being
innovative, the majority felt it also tended to be risk averse when it came to
pursuing innovation. More specifically, 64% of respondents perceived their
company as being totally or generally risk averse and either not pursuing
innovation or not wanting to unless likelihood of success was high. 14% did
not know. Only 23% - less than one in four – of respondents saw their
company as willing to innovate even if the chances of success were unknown.
Fig 6: The view respondents
had when looking at their
organisation's attitude
towards innovation and risk.
[4] Lemaitre, Government Innovation from Within, 2017
[5] Nakata and Sivakumar, National Culture and New Product Development: An Integrative
Review, 1996
2.6%
11.0%
50.2%
13.1%
23.1%
The innovation and risk behavior of organisations(perception of leaders)
Totally riskaverse, doesnot pursueinnovation
Generally riskaverse, rarely
pursuesinnovation
Open toinnovate if
high chance ofsuccess
Neutral/Don'tknow
Willing toinnovate even
when chance ofsuccess low
0
20
40
60
Inno
vatio
n / r
isk
beha
vior
64%ARE RISK AVERSE
23%ARE OPEN TO RISK
14
RESEARCH RESULTS
CRITICAL AREAS OF INNOVATION
Only 3% ofrespondentsfound their riskaverseorganisation tobe veryinnovative.
What lies beneath risk aversion When we zoom in on the "open to risk" and "risk averse" organisations (see fig
6) and cross-reference them with a question on innovation levels people had
of their organisations (see fig 7), we get further confirmation that risk aversion
could very well be an indicator of low innovation within an organisation.
The question inevitably poses itself: can a company stay afloat and innovate
while being mindful of risk? Amer Zureikat, Head of Digital and Multichannel
Marketing at Sanofi Pasteur, shares his thoughts:
“I suspect many would say fear of risk is a barrier to innovation, but I believe
fear of change is really what lies underneath it. That being said, we live in
ecosystems today where organisations are also faced with external barriers.
This is particularly true in the pharmaceutical industry where R&D is very
expensive, regulations are strict, government requirements are high, security
is crucial,etc It is common for people to grow resistant to change in this setting
and naturally, this brings on inefficiencies and dampens innovation efforts.”
Dr. Hazza also adds his insight, “Risk aversion can (...) be a barrier but should
not be confused with risk management, which is just a necessary part of any
process or project.”
Fig 7 : This takes the two
groups of Fig 6 (risk averse
vs open to risk) and
examines how respondents
saw their levels innovation.
Are companies going to
survive in this age of
disruption and
technological
transformation if they are
not willing to take risks to
pursue innovation?
6%
34%
13%
43%
3%0%
4% 4%
52%
41%
Perceived innovation levelsRisk-averse organisations vs organisations open to risk
Not at allinnovative
Not innovative Neutral Innovative Very innovative
Perceived level of innovation
0%
20%
40%
60%
% o
f res
pond
ents
Risk averse Open to risk
93% of organisations qualified as "open to risk" were also described as eitherinnovative (52%) or very innovative (41%)
When focusing on organisations seen as "risk averse" by respondents, wefound that only 46% of the respondents found their company innovative(43%) or very innovative (3%).
15
RESEARCH RESULTS
CRITICAL AREAS OF INNOVATION
Risk aversecompanies whoare twice aslikely to be poorat analysingrisk.
To gain a deeper understanding of the lack of risk measurement, we examined
risk analysis data from fig 8 and cross-referenced it to data from fig 6, which
compared organisations that were open to risk and the ones who were scared
of it. We found that risk averse companies were twice as likely to be poor at
assessing risk as non-risk averse ones.
On the surface, this data could indicate that companies proficient at
calculating risk have a bigger appetite for it, but we suspect they are just more
willing to move forward and study feasibility. In fact, they probably have a
structured innovation process in place which incorporates this analysis phase.
Fig 9 : This graph compares
risk averse organisations
and organisations who are
open to risk, to see how
they differ in terms of their
proficiency at analysing risk
in the innovation process.
51%
32%
18%
65%
26%
9%
Proficiency in assessing risks linked to innovationRisk-averse organisations vs organisations open to risk
Good at analysing risk(scores = 4 or 5)
Medium at analysing risk(score = 3)
Poor at analysing risk(score = 1 or 2)
Perceived level of innovation
0%
20%
40%
60%
80%
% o
f res
pond
ents
Risk averse Open to risk
Can incentives be the key?According to experts, one probable issue that underpins the lower scores on
the back end of innovation could boil down to the lack of employee incentives.
Phil Jordan comments, “A common barrier to innovation I’ve seen is the lack of
incentives and measurements (…) You need to connect the dots between what
you want, where you will get it and create a situation where employees feel like
there is value to innovate. Measuring KPIs and offering incentives validates
and legitimises people spending time trying to solve problems in a new way.”
Ron Jonash seconds this, “As a leader, you must make sure metrics, reward and
recognition mechanisms are aligned to the kind of innovation results and
behaviors you want because it’s behavior that will drive culture.”
Amer Zureikat also agrees, "Within the workforce, I believe innovative
behaviors must be translated into metrics and actionable items that can be
embedded in a company’s appraisal systems."
Risk analysis vs risk aversion
17
RESEARCH RESULTS
CRITICAL AREAS OF INNOVATION
The innovation process: strengths and areas of developmentMore emphasis on the front end of innovation than the back endRespondents were generally optimistic when it came to how effective they
viewed their organisation to be at various stages of the innovation process,
from idea generation all the way through to gaining adoption for a new
solution. Results shows that respondents place more emphasis on the front
end of innovation (i.e. ideation stage) rather than the back end.
Fig 8 : Proportion of respondents who rated their organisation as 4 (good) or 5 (very
good) for each stage of the innovation process, from idea generation to the
promotion of the new ideas
63%
53% 53%
58%
54%
The stages of the innovation process% of respondents who rated their organisations as 4 (good) or 5 (very good)
Idea Generation Risk Analysis Collaboration Implementation PromotingNew Ideas
Stage of the innovation process
50%
55%
60%
65%
% o
f res
pond
ents
63% of all respondents rated their organisations as successful or verysuccessful when it came to finding new ideas or ways of doing things The numbers goes down at later stages:
58% on the execution of those ideas54% on their promotion of those innovations53% on analysing the feasibility of ideas and collaborating acrossdepartments to make them come to life (53% for both)
Gaurav Burman warns us about the danger of focusing only on idea generation
in his interview, “You can do an ad-hoc innovation workshop but the ideas
that come from it will never see the light of day if you don’t have project
owners who can put budgets, resources, timelines and milestones to them.”
Ideas will neversee the light ofday withoutprojectmanagers whocan put budget,resources, time-lines andmilestones tothem.
16
RESEARCH RESULTS
CRITICAL AREAS OF INNOVATION
Cross-organisational collaboration for innovation projects also scored low
(53%) for many organisations. Our collective experience does tell us that
departments working in silos is a common problem in most businesses,
especially medium and larger structures. It was not a big surprise to learn this
was also the case when it comes to productising new ideas.
What was slightly more surprising was the correlation once again between risk
aversion and the ability for cross-organisational work when innovating. In fact,
we found that respondents who considered their organisation as risk averse
also felt it was not as good at collaborating across departments compared to
companies that were open to risk (72% vs 49%).
In a nutshellSo while idea generation is important in the innovation process, assessing risk,
testing and collaborating are necessary in order to bring ideas to life.
Pedro S. Pereira confirms this: “Validating the assumptions of the different
solutions will allow [project teams] to get valuable feedback so they can further
experiment and explore areas they weren’t aware of. It is a way of de-risking
innovation. Going through this iteration process a few times, will help the
hypotheses evolve and give the solution some maturity until it reaches a level
where management feels confident enough to allocate more resources –
financial, human capital, etc so the solution can grow and roll out. As an
innovative company you need to be able to manage this journey.”
Fig 10 : This graph compares
risk averse organisations
and organisations who are
open to risk, to see how
they differ in terms of their
ability to collaborate across
the organisation to leverage
and productise new ideas.
49%
21%
7%
72%
30%
20%
Proficiency at cross-organisational collaboration in order to leverageand productise ideas
Risk-averse organisations vs organisations open to risk
Good atcross-organisational work
(scores = 4 or 5)
Medium atcross-organisational work
(score = 3)
Poor atcross-organisational work
(score = 1 or 2)
Perceived level of innovation
0%
20%
40%
60%
80%
% o
f res
pond
ents
Risk averse Open to risk
Cross-organisational collaboration is a challenge
18
RESEARCH RESULTS
CRITICAL AREAS OF INNOVATION
When asked if their company’s Top Management had behaviors that were conducive to organisational
innovation, the majority of respondents were quite positive across all geographies and company sizes.
Top management attitude towards innovation: halfway there
Strengths: support for innovation, skills development and idea generation73% think top management support innovation
C-suite support is a requirement for driving strategic topics, throughout an organisation,
an innovation is not the exception, so this is an encouraging finding.
72% feel top management focuses skills development inline with innovation
Having a growth mindset and promoting learning and development within a company is
critical for innovation. As mentioned by Pedro S. Pereira, “Innovation can only come about
when people are open-minded and have a growth mindset.”
71% believe top management encourages a culture that fosters idea generation
This reflects the previous finding that idea generation is the part of the innovation process
where most organisations do well.
Areas of development: encouraging trial and error and embracing new ideas
68% think top management play an important role in innovation change management
Change management success relies heavily on the ability to create and adapt to new
processes – and process innovation was something most respondents noted as being a
weak point for most organisations.
64% find top management are receptive to new ideas proposed by staff
This scored lower than most other behaviors. As noted by Gaurav Burman, “Not finding
the time to look ahead and viewing new or younger people’s ideas with myopic suspicion
are all examples of attitudes that hinder innovation.”
59% think top management support trial and error testing of innovations
This behavior had the lowest score of all. Yet, the best way to de-risk an innovation is to
analyse, trial and test. When we drilled down the data, we found that only 52% of respondents
of risk averse companies felt their organisation supported trial and error in contrast to 85% of
respondents who qualified their companies as open to risk.
19
RESEARCH RESULTS
CRITICAL AREAS OF INNOVATION
Leaders worldwide recognise the importance of innovation as most industry
sectors forecast drastic change in the near future. Their intent to innovate is
there and they seem to think their organisation is on the right path.
However, we’ve seen through the research that some critical factors are
slowing down or hindering their innovation performance. Where are they
falling short?
CONCLUSION
Innovation is staying at the top
Experts worldwide say that ideas for innovation should originate throughout
the entire company and that ideas big and small should be, but in the
present research, this is not the case. Ideas are mostly being generated at
managerial levels and therefore, organisations are missing out on a huge
opportunity.
Culture and process are not priorities
Culture and process work closely together and could be the key to injecting
innovation throughout an organisation.
Risk aversion, fear of change are big barriers
The inherent fearful nature of this behavior seems to diminish these
companies’ ability to analyse risk and willingness for trial and error, two
critical elements of a successful innovation process. This aversion
encourages status quo and hinders innovation.
Not enough emphasis on the back end of the innovation process
Many organisations encourage idea generation, but considerably less
emphasize more advanced steps in the innovation process, such as
experimentation and hypothesis testing. This could be caused by several
reasons, including lack of true commitment from leaders which can be the
source of a poor innovation process, lack of incentives and resources.
While the above can be improved, future-proofing is a continuous process
that requires leaders who know how to lead and embed innovation
throughout the entire organisations. Otherwise, their company life cycle will
eventually come to an end.
The intent toinnovate isthere but somecritical factorsare slowing itdown.
20
This is particularly pressing for traditional sectors that are forecast to change
tremendously in the coming years, such as banking or retail. Can the leaders
who got them to where they are today capable of transforming themselves to
stay in the game tomorrow?
Our expert panel agree that it starts with leadership and people.
Muhammad Chbib, has a very clear stance on what companies should do to
completely transform: “Injecting innovation into an existing culture is
extremely challenging. A traditional company that wants to revamp itself (...)
I think it’s impossible without making drastic changes in everything it does.
In my opinion, the first factor to consider is the leadership – you need to
change it and put one in place that is totally convinced it needs to re-invent
itself. You also probably need to replace at least 30% of the staff and inject
new blood – it’s important to get rid of an organisation’s old way of thinking.
If the old style influences or manages the new one too much it cannot work.
Another way for traditional organisations who really want to innovate and
transform their business is to build a parallel universe, scale it, enable it and
put money behind it, using the “old” business to finance the new one.
Because if you don’t, the business will slowly die and vanish in 10 years
anyway. You can’t transform companies from the inside by just changing a
few people at the top – you need people on every level inolved in innovation
- and they can't care about the last 20 years."
Innovation has become a key driver of performance and organisations have
no choice but to incorporate it, not only in their high-level strategies but to
weave it into every aspect of their existence: products, services, culture and
processes. Clearly, understanding where they stand within their changing
industry and market, where they need to go and how they will get there is
absolutely essential.
This research also clearly indicates that having leaders with the right
mindset in place to drive innovation and effectively manage it across the
business is key. How does an organisation know it has the leadership
mindset required to innovate successfully? In our view, this starts with
assessing them, understanding and leveraging their strengths and
identifying their blindspots. Only when an organisation knows where it
stands on a leadership and human capital level can it then begin to assess
their position within their changing industry and market, establish where
they need to go and map out how they will get there.
You needpeople on everylevel involved ininnovation - andthey can't careabout the last20 years.
21
CONCLUSION
The Talent EnterpriseThe Talent Enterprise is a leading-edge human capital ‘think’ and ‘do’ tank
answering tomorrow’s questions today. We help accelerate change through
our talent assessment, innovation-readiness, youth enablement and
capability development solutions, grounded in applied research and
powered by technology. Partnering with policy-makers, employers and
educators, we enable people and communities to thrive, advancing the
application of positive behavioural science.
Our inter-disciplinary team has diverse backgrounds in human resources,
psychology, leadership, psychometrics, behavioural economics, education,
youth development, machine learning, AI and technology.
Global Innovation Management InstituteFounded in 2009, the Global Innovation Management Institute (GIMI), is the
global nonprofit standard certification board for innovation and innovation
management. GIMI was initiated by a group of chief innovation officers,
innovation executives, academics and consultants from around the
world. GIMI’s worldwide advocacy for making innovation a professional
business discipline is reinforced by our globally recognized standards and
certification program, extensive academic programs, communities of
practice, and professional development opportunities.
Sia PartnersSia Partners is a next-generation consulting firm focused on delivering
superior value and tangible results to its clients as they navigate the digital
revolution. Sia Partners’ global footprint and expertise in more than 30
sectors and services allow them to enhance clients' businesses
worldwide. Sia Partners has conducted extensive research on the field of
Growth and Innovation, for both private and public sector organisations.
Sia Partners works with many organisations helping them to develop their
innovation culture, capabilities as well as to establish world-class
frameworks and processes.
ABOUT THE AUTHORS AND RESEARCH
Research backgroundWe conducted a survey over a
3-month period across 587senior stakeholders –
managers, directors, seniorindividual contributors, seniorleaders and board members –
across a variety of industriesand over 20 countries. This
research was then analysedagainst interviews made with 7
professionals who haveexpertise in the innovation
sector in Europe, the MiddleEast, Asia and the Americas.These expert interviews are
outlined in the Appendix.
22
REFERENCES
Credit Suisse, Corporate Longevity Index, https://research-doc.credit-
suisse.com/docView?
language=ENG&format=PDF&sourceid=em&document_id=107099180
1&serialid=TqtAPA%2FTEBUW%2BgCJnJNtlkenIBO4nHiIyPL7Muuz0FI%
3D, February 2017,
Lucinda Shen, These Companies Have Made the Fortune 500 EveryYear Since 1955, Fortune.com:
https://fortune.com/2018/05/22/fortune-500-companies-list-
berkshire-hathaway/ , May 22, 2018
Lemaitre, Government Innovation from Within, 2017
Nakata and Sivakumar, National Culture and New ProductDevelopment: An Integrative Review, 1996
The Talent Enterprise, Sia Partners, The Global Innovation
Management Institute, The Innovation Mindset of Leaders - The ExpertView, February 2020
2423
ACKNOWLEDGEMENTS
Nasser Abu Shehab CEO, Strategy and Corporate Governance Sector, Roads & Transport
Authority Dubai (RTA)
Dr Hazza Khalfan Alneaimi, Dubai Government Excellence Program – The General
Secretariat of the Executive Council of Dubai
Gaurav Burman, APAC President at 75F
Muhammad Chbib, CEO of Tradeling.com and Co-founder of Tajawal.com
Prof. Ronald Jonash, Chairman of the Board at Global Innovation Management Institute
Phil Jordan, Group Chief Information Officer at Sainsbury’s
Pedro S. Pereira, Head of Innovation at SAP
Amer Zureikat, Head of Digital and Multichannel Marketing, Sanofi Pasteur
Empty text
24
This research report was greatly supported by the insight provided by our expert
panel. We would like to thank the following contributors for their valuable time as
well as the depth and breadth of knowledge and expertise they shared with us :
We'd also like to thank everyone worldwide who took time to fill out the survey
that was used as a basis for the report. This white paper is intended for you to
read, use and share with others.